Alex Kraft and I talk Friction and Adaptability

Oh, there you go. I'm in the wrong room.

There you go. I've been noticing your blogs the last couple of issues, one on adaptability, the first one about a month ago or so, and the last one on friction. And I thought rather than have some specific application to the business, to your business or mine or the industry, that we just have a talk about those two issues, because I think they're at the core of where you and I first met, which was enhancing the customer experience. So if we can and get that to be our starting point, and we'll just see where this goes. God knows where it goes with the two of us, but let's start that way. And maybe you can give us a bit of a... An idea of what your thought process was in getting to adaptability and friction as the two subjects.

It's an interesting perspective. I think that's how I've introduced you in some of the social platforms that we've shared your blog post. perspective of enhancing the customer experience and not complaining about the fact that loyalty from a customer doesn't seem to be the same as it used to be because, you know, you've heard me say, I don't think we've done much to earn the customer's loyalty. But underlying all of that, in everything we do in life, in our jobs, in our homes, with our children, our spouses, partners, we have to be adaptable. it's they're not going to follow what we want to do all the time it's not our rules it's not our game if you want to get along you're going to have to adapt

I agree with you 100%. In the last couple of days, I've been watching Magic Johnson and Larry Bird as two individuals who became very good friends, but who competed with each other from university to the end of their professional career. And how they talked about, you know, I just finished my five hours of practice. I'd just done my thousand shots, but I better do another hour because magic's going to be doing the extra hour and magic saying the same thing in reverse. And then, you know, bird trash talking. Kind of like the culture of the everybody but cat or maybe everybody but cat and deer has to work harder to get into the door to make the sale because they're not the first, they're not the Kleenex or the Polaroid or the Kodak of the industry. But Bird used to trash talk. And apparently he was phenomenal at it. But he did it with such a nice. Nobody felt that it was trash talking. And he used to call plays on the floor as it was going down.

And, you know, so talk about a competitive nature of a guy. And there's friction, right? I'm creating competitive friction. In your blog, I think you mentioned that, well, I have to call the dealer. That's friction. Because I can't satisfy everything. I was reviewing a digital dealer discussion that. Mets Kramer and I had way back when. And we're looking at websites. And I think the three of us, when we were last talking together, we talked about websites. Let's go look at 100 of them and see what the hell they look like. Talk about friction.

It's almost embarrassing, Alex, that we don't have a better understanding in the industry of the fact that commercial transactions. are done on the internet. Research for commercial transactions are done on the internet. And if we don't have a good presence on the internet, it's like being barefoot as a trailer or a cobbler. I don't know how we break that through. What's the thinking pattern that we need to? I think the younger ones get it. I'm not sure.

Yeah.

Yeah, I call them thought leaders or disruptors. You know, in the 80s, total quality management continues, quality improvement, that movement. Had a lot of traction for a while. And then it went to 5S and not 5S, Six Sigma right away and understanding failures along the line. When I was in school, it was called industrial engineering. But we've lost our way on change, improvement, which I'm trying to provoke or re-engage with in our newsletter with the different departments and giving subject matter out there and saying, hey, folks, read this, talk about it. If there's something here that you think is good, okay, let's implement it. Let's do something. Management, leadership is about implementing things. Implementing things means something's going to be different. And if something's going to be different, we've got to have different people. We've got to have different people and how they think. It's weird.

Using Ford as an example is almost textbook because Henry Ford was a radical innovator. He was out so far in front of everybody. It was scary. Environmentally, too.

It's almost like about every 20 years, you need to change the blood in the body. You have to regenerate the whole thing. Like Jack Welch in 1980, when he came in and was chairman, he changed the whole view of General Electric. Changed where they went, changed their structure, changed their strategy, changed everything. And I'm just going to use... 20-year increments. It was longer than that. But then here comes Jeffrey Immelt. And he was smarter, more experienced, probably a better personality, more empathetic as a man, a person. And yet he was not as strategically acute, and the company almost went away on his watch. That's right. And it had nothing to do with skills. It's kind of a, you know, one of the interesting things you like to read, George Westinghouse and Thomas Edison. Edison created General Electric. Westinghouse created Westinghouse. What was the thing that set those two men apart? Have you any idea?

Have you read anything about that? A little bit.

Any idea what it was that separated General Electric right off the get-go?

It's not fair to ask that and put you on the spot. Thomas Edison created the first on the planet research and development department. So instead of relying on one man's intellect to put out patents, they had a team of people that were putting spitballs up on the wall to see what would go. And off they went. It's kind of like the story of 3M with the sticky note. That's not where they started. But you take the sticky note away and those guys aren't in business anymore. So, again, both of those cases, it's friction and it's adaptability, isn't it? It is. All those cases.

Yeah, I call those sore spots. We make things difficult because we're repeating, we're replicating the old thing. Alex Schusler, who started SmartX, coined the phrase with us from paper to glass. When we bring in the computer, all we've done is we've taken a six-part form that we used to fill in by pen. We put the template on the screen and we now fill it in with a keyboard. It's exactly the same damn thing. And the customer, when they want a part, they call into the dealer. If they do, they have two questions. One is, have you got it? And the other is, how much is it? And the first thing we do to them is, what's your name? Because I got to find your account number. Well, that's right. You know, so friction.

Yeah. Yeah. Yeah. Friction is a really, that's why I was so taken by it. It's a wonderful expression. It's a wonderful term of making things different and difficult for the customer. Right. I don't give them enough information. You got to call me. That's friction.

Well, that's your athletic background. Fundamentally, everybody's competitive. That's why we walk instead of roll around on the floor.

And basketball was your forte and your sport of choice. What Magic and Bird were talking about, interesting, I call them Magic instead of Johnson, but what they were talking about is if I'm starting a franchise, who are you going to pick as your first player, including everybody? Michael Jordan, LeBron James, everybody. And they asked, oh, there must have been 30,40,50 professional basketball players, most of them that were in the Hall of Fame. Who do you think they chose?

Larry.

Almost unanimously.

Oh, yeah, absolutely. But the thing that they seemed to make a point about with Larry was, Michael was better at this. Irvin's better than this at this. Bill Russell's best at this. Shaq is best at this. LeBron is best at this. Larry's best at all of it.

Yeah. Yeah. When you look at the guy homely macro. Yeah.

Well, the best, if you want to look at an example, do you remember? The fullback for the Green Bay Packers under Lombardi. You remember him? His name was Jim Taylor.

Yeah, smart guy. You had, Bart Starr was a fourth-string quarterback. When Lombardi arrived, he became the starting quarterback. And there was a whole bunch of stories like that. But one that got my attention, here's the fullback. Very low recognition job in those days. It was the... Gail Sayers time and that kind of crowd. And here's this guy from Louisiana. And he worked on the drill rigs in the off season. And when he was wanted to look at you, he's walking down the street when he wanted to look at you on the left hand side, the whole upper body changed because he wasn't able, his neck was so developed, he wasn't able to turn his head. So imagine somebody coming at you with a helmet on top of that neck. And, you know, Taylor used to say, I don't want to run around people. I want to run at them people because the next time they ain't going to be there.

So, again, it's the 036. Like, you've heard me say this with Learning Without Scars, I want to try and help people identify their potential. And I don't think there's enough people that think about potential. I'm all about, as I get older, I'm all about what's your purpose in life. What are you trying to accomplish? What do you want to be when you grow up? And I'm still searching, by the way, but, you know, getting people to think that way, that's a very different discussion.

Having a guy that I worked with for 40 years and we talk about sitting and talking over brown water, you know, scotch or bourbon or rye or whatever the heck it is, and just talking about things. And it's amazing where if you can get two people talking honestly about themselves and each other, it's scary to be that vulnerable. But boy, do you grow?

And isn't that what this is about? Isn't it about getting better?

always been jealous Alex of the people that could go to work in the morning and go home at the end of the day and turn it off because I don't understand that I don't know it's not my makeup I never felt, and my response to it has been, well, you guys are schizoid. You got two lives. What's going on here? I'm the same person home and away. How can you do that? And I'm jealous because they're at peace with themselves. I don't know that I've ever been at peace with myself. And that's not a nice thing to say about yourself either. It's not very comforting. Like your experience of the last two years, we didn't do anything. I was blessed right from the get-go that I was the agent of change in the dealership. Anywhere that they had a problem, they put me. And boy, I was blessed, Alex. And that was somebody seeing in me something. Sure. And taking advantage of it.

One dealership. And the same guy that recognized that fired me six times. You know, talk about a weird world. But, you know, so why doesn't leadership? And I think we're getting there. And I agree with you. People want to improve. They want to get better. They don't know how to get there. They need somebody to lead them there.

They're all the same.

The leader in the market in any industry you want to look at wants to protect their position. Anybody who isn't the leader in the market wants to displace the leader in the market. But over the last, and let me use computers as the excuse, go back to the 1950s when the first commercial computers became common. We haven't, we've shrunk the number, of entries in any industry. Think in terms of an author. Once you get past the top 20 authors in the world, it's a long way down. Top 20 musicians, top 20 singers, top 20 quarterbacks, whatever the heck, we just had the draft take place. And people look at those leaders, is LeBron James really that good? Or is his team that good? I think we got an answer this year with the LA Lakers not even making the playoffs. He might be the best player on the world, but he's on a team sport. And that's not going to go. Tom Brady did a wonderful job with the Tampa Bay Buccaneers the first year there.

He didn't do the same wonderful job the second year. Aaron Rodgers, I think, is one of the best quarterbacks that's ever played. Look at what the Packers drafted this year. Nothing but defense. Because they've been getting their butt given to them every year in the end. By defense, winning championships. Where'd that come from, right? In the construction world, take it away from equipment or parts or service or rentals. What are we? How do we attract customers? We're in a relationship business, but we don't deal as Mets talks about it and me too. Machines are what, that's our deal. So if I know that you have a machine, whether it's a car or a washing machine or a tractor, I know when you're going to need to change that machine. Nobody's paying attention to that. There isn't anybody in the company that does data analytics, business analytics, business intelligence. Is that an oxymoron or what? So friction again, how do we get people to accept?

And I've got three things that I always say. I want people to understand what the heck we're trying to do. I want people to accept what we're doing as the right thing to do. In other words, I want to have a fight about it because we will have disagreements. And then we'll make some progress. So how do we get people? Yeah, I know we have to have an internet presence. Yeah, I know that I want to replace, get rid of friction. How do we get that done? Who's the leader? Is it a matter of creating a new job function? Hiring different people might be.

Like yourselves.

Yeah, I think you're right. And the other thing that seems to be starting to happen or hopefully is happening more, Dale Hanna, who you've spoken with and met, and he's one of our, in my mind, thought leaders, he outsources all manner of his work. And, you know, I remember becoming a data processing manager. That's what they called IT in the 1800s. And we did payroll. for the company. So every employee's check came from data processing. And one particular weekend, which was a payroll weekend, we had a power failure on the island of Montreal. There was no power. So I couldn't run payroll. I couldn't create checks. So Monday morning, VP Finance and controller are on my case because they had to write manual checks to issue to people. And I said, well, we're not going to do the payroll anymore. I'm not going to be subject. I'm not going to subject you to this. I'm not going to subject our team to this, nor the employees to this.

We're going to outsource payroll. This is 1974 or five or somewhere in that. And nobody did it in those days. And I just wasn't prepared. And again, I'm weird, but I wasn't prepared to make the company vulnerable because of some aberration that we had. So here we are in 2020. Two. And now we have cloud computing. We have shared resources. There's not supposed to be downtime anymore in that environment. And there is. And I'm getting cranky. What the heck is going on here? You guys are starting to save money. You know, it's again, I want somebody to look after selling machines. I need the relationship. I need that good person. And I got to arm them with data, with tools, with software, with technology, with phones, with tablets, whatever the heck it is. I need them to be a member of the United States military is walking around with $10,000 of technology on their body when they go to war. Our salesmen don't have $1,000 worth of technology.

And that includes their cell phone and tablet.

Yeah. And isn't that a shame? It is. So, you know, George's machine just hit 15,000 hours. Ding, ding, ding, ding, ding, ding. Should be flashing across my screen. Everybody who's in that territory should know that right now. They don't. That's friction.

Yeah, I agree. I agree. And Carvan is a good example. And I also agree with you. I don't think that you're a competitor to anybody. You have no skin in the game. You don't own an asset. Nor is it your intent ever to own an asset. Neither was my intent to run a payroll check. Other people can do that. That's their expertise. I'm trying to put together packages for OEMs on learning. And recently I had a manufacturer say, well, we're having people create classes and put it up on our LMS or associations saying the same thing to me. And I said to them, okay, so you want to take my copywritten intellectual property. and have me forego any control of it and give it to you and to trust you as to how that works. And they said, yes. And I said, you know, maybe what I should do is I should start outsourcing engineers to make a machine. My business is education, but maybe I'd have some success in selling machines.

You guys, you know, there's Bob Lane when he became chairman of John Deere. And he was a regional rep in Denver when I was running EBS in Denver. And that's when they bought Applied Data Systems, which became John Deere Information Systems. And I had dinner with Bob and said, hey, Bob, what do you want to do? You want to be in the equipment business or the software business? He said, that's above my pay grade. Well, he became chairman. I let him have two or three months. And I called him and said, OK, tell me what you're going to do now. It's a standard story that I talk about all the time. whether it's the best or not, is the most common add-on, bolt-on, sales management, customer relationship management tool that we have. No basics, SAP, Oracle, JD Edwards, Infor, none of those folks did anything about it. They wait for, just like your Ford example, they wait for Tesla, they wait for Elon Musk.

Isn't it interesting, Musk has a company, called the boring company. Why do we have our highways above ground? Same thing and everything, isn't it? Customer centric. What does the market need and want? I've been reading a lot recently about the fact that business has changed and somebody might even have been you had a friend who owned a business,30,40 people. Here comes the pandemic and they shut the office down. Everybody worked from home. And they had an employee meeting at least once a month, a dinner. And after a couple of months of this, everybody, nobody missed ever. And the culture of the company and the camaraderie of the company. So the pandemic's over and the owner goes back to the employees and says, do you want to come back to the office? And they said, no. He's selling the business. He's selling the buildings.

It's a lot cheaper to have a meal once a quarter or once a month or once every two weeks than to pay the heat, light, insurance taxes, et cetera, of the building. And then on the other side of the equation, everybody, there's a lot of technicians have to go back to a shop or to a truck. But there's now noises about shared services where we'll have, you know,2,000,3,000 technicians co-op, kind of like independent truckers. Change is all around us, Alex.

Yeah, the example of Joel Barker, who coined the paradigm or. exploited the term paradigm back in the 80s. The way he looks at it, he said, go into a bookstore, a magazine, just look at magazines and pick up industries, magazines that you know nothing about. You know, cigars, if you're a non-smoker, read that. Wines, if you're a non-drinker, read that. Planes, if you're a non-flyer, just something wide out of your comfort zone. And you'll be shocked. You know, the first time if you've ever been, go to Amsterdam. First time I flew into Amsterdam, I had to take a taxi. And I went out and there was not a taxi at the airport other than a Tesla. Zero. No other vehicles at all. Musk, years and years ago, had made a deal with the airport in the Netherlands, in Amsterdam, that he would give free, fuel for all the Teslas charging forever.

He would sell them at X, which was below market, if the airport would agree that there'd be no other taxi on the property. Now, I wonder how many Teslas that sold him. And that's thinking out of the box, isn't it?

It's phenomenal.

Back in the 1970s, there was a guy by the name of Dieter Esch, who was a Canadian, but of German heritage. And he created the first dealership of multiple brands under one tent. Now, Dieter was an interesting dude.

No, no. I'm not trying to do that because it's automotive. Yeah. Carl Sewell, the guy that created the customer satisfaction index for General Motors. He's a car dealer. He started the family, started a couple of generations ago as a Cadillac dealer. He's got every damn brand there is known to man. And there's a company in the desert from Maserati to Rolls to Bentley to Volkswagen. Doesn't matter. We got all cars. What do you want? It's a circus, right? It's a county fair. That's frictionless. Street fairs, marketplaces. On the weekend, I go to get some vinegar from a community college market. that they make out of mango and pineapple. It's absolutely phenomenal. But there's all these folks. It's the old days. Snake oil salesmen at every corner. That's the Volvo salesmen. You know, here we go. All kinds of fun stuff.

But everybody's in the same place at the same time in the same market competing with each other, trying to attract the market to them. We don't do that anymore.

Yeah, with that really upbeat assessment at the end, I think that's where we should stop because what I'd like to do is leave you some room. I don't know what the third chapter of adaptability and friction is going to be, but there has to be a third now. This is a very different discussion than we've had. It's not focused on any one thing other than ideologies and philosophies and customer service and focusing on the customer experience. We've lost sight of that, I think.

And for that and your time today, thank you, Alex. I appreciate it. And everybody out there listening, thank you for listening to another Candid Conversation. And I look forward to having you with us at the next one. Mahalo. Thank you for listening to our podcast. We appreciate your support. Should you have any thoughts or comments, please don't hesitate to contact us at www. learningwithoutscars. com. The time is now. Mahalo!